Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Buying Viatical insurance policies, good or bad?
Old 10-14-2007, 09:56 AM   #1
Recycles dryer sheets
 
Join Date: Jun 2007
Posts: 316
Buying Viatical insurance policies, good or bad?

I've just recently heard of this type of investment. I'm Canadian, and there is no such thing here.

A company has recently sprung up in my area that sells U.S. policies. I've done some research and the returns as well as the basics of the investment look good. The problem is that there seem to be some scammers out there. Is it really that bad? Often you hear more about the 1% that got screwed over than the 99% who are happy customers.

I'd like to hear from anyone with opinions or experiences with this type of investment.
__________________

__________________
Grizz is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-14-2007, 10:02 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Ed_The_Gypsy's Avatar
 
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,293
IMHO: You gotta be nuts.

If the guy takes too long to die, you lose. It seems similar to to buying a tax lien. You only make money when the property sells. There is a piece of property in Bellingham that lay partially completed for 100 years.

I prefer lottery tickets.

Time once again for me to offer my Faith-Based Investment Services: Give your money to me and pray you get it back. Philosophically endorsed by the current Administration. How can you go wrong?
__________________

__________________
my bumpersticker:
"I am not in a hurry.
I am retired.
And I don't care how big your truck is."
Ed_The_Gypsy is offline   Reply With Quote
Old 10-14-2007, 10:52 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
I have some speculative swamp land for sale... as a beach front an investment. If you prefer drier inland climate, I also have some desert property for sale.
__________________
chinaco is offline   Reply With Quote
Old 10-14-2007, 11:33 AM   #4
Recycles dryer sheets
 
Join Date: Oct 2005
Posts: 325
What is it exactly?
__________________
CybrMike is offline   Reply With Quote
Old 10-14-2007, 11:43 AM   #5
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
You buy through a broker an existing life insurance policy from a terminally ill owner at a discounted price. Viatical is from the latin word viaticum meaning provisions for a journey. The ill person gets needed money to live on before he or she dies.

There are morality issues with betting on when a person will die as well as practical issues. Also, you are vulnerable to any fraud by the insured which causes the insurance company not to pay.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Old 10-14-2007, 11:49 AM   #6
Recycles dryer sheets
 
Join Date: Jul 2004
Posts: 430
Viaticals became "popular" back when AIDS was still relatively untreatable. But, then several drugs were developed and people no longer were dying as rapidly as before.
__________________
gindie is offline   Reply With Quote
Old 10-14-2007, 10:44 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,384
Quote:
Originally Posted by Martha View Post
Also, you are vulnerable to any fraud by the insured which causes the insurance company not to pay.
Very good point. In a case like this, I don't suppose that the owner of the viatical policy would make a very sympathetic plaintiff either.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is online now   Reply With Quote
Old 10-15-2007, 07:31 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
You also have to deal with increasing regulatory scrutiny of this market. "Stranger-owmed life insurance" in all its forms is growing quickly, and this is drawing the attention of insurance regulators, consumer protection regulators, securities regulators and tax authorities.

I would pass unless you can invest enough to hire someone sharp to help you (actuary with fixed income/financial experience might do it).
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 10-15-2007, 09:47 AM   #9
Thinks s/he gets paid by the post
saluki9's Avatar
 
Join Date: Feb 2005
Posts: 2,032
In addition to what Brewer says, you also have to be comfortable with the idea that the sooner the insured dies the higher your return.

To me that's just asking for bad karma.
__________________
saluki9 is offline   Reply With Quote
Old 10-15-2007, 10:04 AM   #10
Recycles dryer sheets
 
Join Date: Jun 2007
Posts: 316
Quote:
Originally Posted by saluki9 View Post
In addition to what Brewer says, you also have to be comfortable with the idea that the sooner the insured dies the higher your return.

To me that's just asking for bad karma.
I'm a believer in karma as well, but I'm at peace with it since the way I see it, if nobody bought these policies then lots of people couldn't afford to pay medical bills or do the things that they always wanted to do before they died.
__________________
Grizz is offline   Reply With Quote
Old 10-15-2007, 10:52 AM   #11
Full time employment: Posting here.
 
Join Date: Oct 2003
Posts: 961
Quote:
Originally Posted by Grizz View Post
A company has recently sprung up in my area that sells U.S. policies
Well, that's the first red flag right there, eh.

California put out this consumer summary of Viatical Settlements, as did British Columbia.

If someone is selling something, it's probably a security, and hence it's probably regulated by someone. Or the people selling it are probably regulated by someone. In Canada, try calling your territory's securities commission.

Quote:
since the way I see it, if nobody bought these policies then lots of people couldn't afford to pay medical bills or do the things that they always wanted to do before they died.
That's a good sales pitch, but doesn't mean that it's a good investment.

- Alec
__________________
ats5g is offline   Reply With Quote
Old 10-15-2007, 11:01 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by ats5g View Post
That's a good sales pitch, but doesn't mean that it's a good investment.

- Alec
Actually, life settlements can be a good investment. But you have to be a big enough, sophisticated enough investor to make it work. If you are small and retail, you run the risk of being picked off or defrauded.
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
I'm working but mentally I'm retired. Good or bad? Rob Life after FIRE 8 10-02-2007 08:59 PM
Dave Ramsey.....Good, bad? Mo Trooper Young Dreamers 38 09-08-2007 05:10 PM
Investment Returns Calculation and Good vs. Bad? Keopele FIRE and Money 17 06-19-2007 11:25 AM
Bad Turns Good boont FIRE and Money 8 05-22-2006 11:10 PM
buying life insurance Bimmerbill Other topics 34 04-24-2006 01:03 PM

 

 
All times are GMT -6. The time now is 03:04 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.